| Book Edition | 14th Edition |
| Author(s) | Hartley, Kerin |
| ISBN | 9781259924040 |
| Publisher | McGraw-Hill, Inc. |
| Subject | Business |
Tariffs and quotas are the measure to protect the domestic industry from foreign competition and forms the act of protectionism.
A quota is a constraint placed on the volume of a good that can be imported or exported. While, tariffs are a government tax on goods or services being imported. Tariffs and quotas are imposed on the imports to protect the domestic industries. Tariffs costs are not hidden as the importer is aware of the rates he needs to pay on import. While when the government imposes quotas, the supply of the foreign goods falls, thereby raising prices and this increased price is a hidden cost for the importer.
Quotas denote a hidden tax on buyers because the government restricts the quantity that can be imported.This raises the price of the commodity being imported and the burden falls on the end users. Tariffs are actual government tax levied on the imported commodities.